WTO establishes panel to rule on US - Canada lumber dispute

12-04-2018

At the request of Canada, the WTO’s Dispute Settlement Body (DSB) agreed on 9 April to establish two panels to examine Canada’s complaints regarding anti-dumping and countervailing duties imposed by the United States on imports of Canadian softwood lumber, WTO announced.

Canada recalled that on 27 March it had first requested the establishment of a panel to examine this dispute, as consultations held in January with the United States had failed to resolve the matter. However, the United States objected to Canada's first request. Canada reiterated its argument that the measures at issue were inconsistent with US obligations under the Agreement on Subsidies and Countervailing Measures (SCM Agreement) and the General Agreement on Tariffs and Trade (GATT) 1994. The duties imposed are having a negative impact on softwood lumber producers in various Canadian provinces, Canada said.

The United States reiterated its belief that the measures in question were fully consistent with US obligations under the WTO agreements. It also reiterated concerns that the Canadian request for a panel included an item that was not identified in Canada's request for consultations, and was thus not subject to consultations; and that the request included claims against so-called measures that do not exist and could not be challenged "as such". The United States said it was disappointed that Canada had proceeded to request a special DSB meeting to consider its second panel request rather than addressing these concerns.

Canada recalled that at the time of its request for consultations, it identified orders imposing countervailing and anti-dumping duties as measures that will be part of the dispute. Canada considered that the fact that the orders were issued after the consultations has not changed the scope and the essence of the dispute. It insisted that the orders at issue fall properly within the panel's terms of reference.

The DSB agreed to the establishment of the panel. The European Union, Japan, Korea, China, Turkey, the Russian Federation, Brazil, Kazakhstan and Vietnam reserved their third-party rights to participate in the panel proceedings.

Canada recalled that, after consultations held in January 2018 did not resolve the dispute, it requested on 27 March the establishment of a panel to review the United States' application of the Differential Pricing Methodology in its anti-dumping determinations regarding softwood lumber from Canada. The US blocked that request at the 27 March DSB meeting. Canada said the United Stated acted inconsistently with its obligations under both the Anti-Dumping Agreement (ADA) and the GATT 1994.

Canada reiterated its request for the establishment of a panel and suggested, in accordance with Article 10.4 of the Dispute Settlement Understanding (DSU), that the matter be referred to the original panel that considered the Differential Pricing Methodology in DS464, "US — Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea". For softwood lumber producers and communities across Canada, these duties represent a considerable hardship, which only furthers the negative impact of the punitive countervailing measures imposed by the United States on the same product, Canada said.

The United States said it was disappointed with Canada's decision to move forward with its second request and reiterated that its measures were fully consistent with US obligations under WTO law. It also noted that the panel request raises an item that was not identified in Canada's request for consultations, and was thus not the subject of consultations. The United States also said that the panel request includes an unwarranted assertion of urgency and a "baseless" argument that the measures at issue are already the subject of a panel proceeding. The US said this is incorrect because the measure at issue is the final determination in the anti-dumping investigation of softwood lumber from Canada made in November 2017.

In response, Canada referred to its earlier comments regarding the non-existence of the measure during consultations and to its statements at the DSB meeting of 27 March with respect to Article 10.4 of the Dispute Settlement Understanding. The United States said that Article 10.4 concerns measures that are the subject of panel proceedings, which it considered not to be the case at hand; Canada's request for the establishment of a panel referred to anti-dumping measures imposed on Canadian softwood lumber while the measure at issue in DS464 was the methodology used by the United States which Korea challenged as such. In the absence of an agreement on Canada's request, the DSB cannot refer the matter to the original panel, the US said.

Canada replied that it was not requesting that the matter be referred to the original panel but rather that a panel be established. Canada explained that it would deal with panel composition in due course.